PRESIDENT Bola Tinubu has assented to the 2023 Electricity Act, which replaces the Electricity and Power Sector Reform Act of 2005.
The Act will end the monopoly of electricity generation, transmission and distribution in the country by the federal government through the national grid and enable states, companies and individuals to generate, transmit and distribute electricity.
The Electricity Act was first passed in July 2022 under the former President Muhammadu Buhari administration.
The Electricity Act 2023 provides a framework to guide the post-privatisation phase of the Nigerian Electricity Supply Industry (NESI) and encourage private sector investments in the sector.
Under the Act, the Nigerian Electricity Regulatory Commission (NERC) will be able to regulate the electricity sector within Nigeria without prejudice to the powers of the states to make laws and create electricity markets within those states and to regulate those markets.
It stipulates how NERC can transit regulatory responsibilities from itself to state regulators when they are established. But until a state has passed its electricity market laws, NERC will continue to regulate electricity business exclusively carried out in those states.
Lagos, Edo and Kaduna states already have electricity market laws and can start regulating their market. But for other states without such laws, NERC will regulate and still carry out cross-border regulations, while generation and transmission across states will still be regulated by NERC.
The Act grants lawmakers the power to carry out oversight responsibilities and function over the NESI through its respective Committees on Power in the Senate and House of Representatives, notwithstanding the supervisory powers of any government ministry over government-owned enterprises or other entities operating in the Nigerian electricity supply industry.
Electricity generation licencees are obligated to meet renewable generation obligations, as may be prescribed by NERC. Under the Act, electricity generating companies will be mandated to either generate power from renewable energy sources, purchase power generated from renewable energy or procure any instrument representing renewable energy generation.
It also mandates the imposition of renewable purchase obligations on distribution or supply licencees.
The Act also states that anyone may construct, own or operate an undertaking for generating electricity not exceeding 1 (One) megawatt (MW) in aggregate at a site or an undertaking for distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or such other capacity as NERC may determine from time to time, without a licence.
